The latest consideration of concurrent proximate causation arose in the interesting context of loss caused by the controlled explosion of a WWII bomb almost 80 years after it was dropped. Was the damage “occasioned by war” and therefore excluded under the terms of the policy?
Head of Policyholder Disputes Aaron Le Marquer examines the recent Court of Appeal decision in University of Exeter v Allianz. In this unusual case, the Court of Appeal found that the second world war was a proximate cause of the loss despite the extreme passage of time, and the university’s claim was therefore excluded from coverage.
However, the judgment is perhaps most interesting for highlighting a number of questions that were not determined by the court rather than those that were. This suggests that the case may not represent the last word on the application of war exclusions to losses suffered long after a war has ended.
Background
In 1942, Exeter suffered a series of devastating Luftwaffe bomb raids during the course of the second world war. One 1,000kg bomb fell onto farmland on the outskirts of the city but did not explode. Seventy-nine years later, in 2021, contractors working on what was by then a construction site adjacent to some of the University of Exeter’s halls of residence unearthed the bomb. It was determined that a controlled detonation was required to dispose of the bomb, which when carried out caused damage to buildings in the immediate vicinity of the site, including the university’s halls of residence.
The university was insured for damage to its property under a policy issued by Allianz, which at general exclusion 2 excluded loss “occasioned by war”. Having refused to cover the claim in reliance on the war exclusion, Allianz then took the unusual step of issuing proceedings against the university, seeking declarations that it was entitled to decline the claim.
The primary issue before the court was whether the damage claimed by the university was “occasioned by war” and, therefore, excluded from coverage. It was agreed by the parties that the dropping of the bomb was an act of war and that the words “occasioned by” meant “proximately caused by” in the context of the policy. The issue, therefore, became whether the loss was proximately caused by the dropping of the bomb.
The university argued that the deliberate detonation of the bomb in 2021 was the sole proximate cause of the damage and that the claim was, therefore, covered. It claimed that the second world war was too remote to be viewed as a proximate cause of loss occurring in 2021, and the parties could not have intended that the war exclusion should apply to historic wars that had long ended.
The university’s alternative case, if the dropping of the bomb was found to be a concurrent proximate cause, was that the rule in Wayne Tank was ousted by the drafting of the war exclusion, which lacked the express references to multiple causes found in other exclusions. (The Wayne Tank rule is that insurers may avoid liability where there are concurrent proximate causes of damage, one of which is expressly excluded from coverage under the policy.) If the rule in Wayne Tank was ousted, as argued by the university, the excluded proximate cause would not prevail over the covered cause, and the claim would succeed.
The first instance judgment
At first instance, His Honour Judge Bird found that the dropping of the bomb was the sole proximate cause of the damage, which was therefore excluded from cover. Alternatively, if the dropping of the bomb was a concurrent proximate cause with the controlled detonation, then he rejected the university’s argument that the Wayne Tank rule was ousted by the express drafting of the policy. The claim would still, therefore, be excluded.
The Court of Appeal judgment
The university appealed on several grounds, focused primarily on challenging the judge’s finding that the dropping of the bomb was the sole proximate cause of the loss.
The Court of Appeal disagreed with the court below that the dropping of the bomb was the sole proximate cause of the loss. In the Court of Appeal’s view, the dropping of the bomb in 1942 and its controlled detonation some 80 years later were concurrent causes. However, that finding led inexorably to the same conclusion that the claim was excluded from cover since, by the university’s own admission at appeal, a finding of concurrent proximate causes would lead to the claim being excluded from cover as a result of the rule in Wayne Tank.
Comment
Both the Court of Appeal and the court below reached a firm conclusion that the war was at least a proximate cause of the loss, and the parties agreed (at appeal) that, in that case, the claim was excluded from cover. The university does not appear to have sought permission to appeal the judgment further, and it is final as far as this policyholder is concerned.
However, a number of comments in the Court of Appeal’s judgment serve as a reminder that the decision was reached specifically on the basis of the grounds advanced by the university and upon a number of points agreed by the parties. Notably, in various parts of his judgment, Lord Justice Coulson signposted a number of matters that were not in issue, were not argued and were not, therefore, decided:
“None of the grounds of appeal seek specifically to challenge the judge’s alternative analysis [that a finding of concurrent proximate causes would lead to the claim being excluded].”
“In my view, this is a classic case where there were two concurrent causes of the loss and damage […] One of those concurrent causes was expressly excluded from cover under the policy. In those circumstances, the rule in Wayne Tank is that the exclusion will generally prevail. Mr Pliener advanced no argument on appeal that the rule did not apply. For that straightforward reason, if my Lords agree, I would dismiss this appeal.”
“.. at trial, Mr Pliener had an alternative argument, not pursued on appeal, that envisaged that the two causes might be held to be of approximately equal efficacy, but that Wayne Tank did not apply.”
The Court of Appeal therefore appears to have contemplated that further argument may have been pursued as to the effect on the coverage analysis of a finding of concurrent proximate causes. In that context, it may be notable that at paragraph 11 of his judgment, Lord Justice Coulson also found it relevant to repeat the finding of the judge at first instance as to the proper nature of the exclusion in question:
“… the structure of the general insuring clause was such that no liability to indemnify in respect of loss occasioned by war ever arose. The exclusions were therefore part of the definition of the scope of cover, not exemptions from liability for cover which would otherwise have existed.”
It is well-settled law that where a loss arises concurrently from two proximate causes, one of which is not covered but not expressly excluded either, the claim will be covered (The Miss Jay Jay). In contrast, where one of two concurrent proximate causes is expressly excluded, the exclusion prevails, and the claim fails (Wayne Tank).
In light of the judge’s comments above, was it therefore open to the university to argue that since loss occasioned by war simply fell outside the scope of the insurance cover provided, rather than forming the basis of an exemption from liability, the rule in The Miss Jay Jay should apply rather than that in Wayne Tank so that the uncovered concurrent proximate cause would not undermine the covered cause (the detonation), and thereby allow the claim to succeed?
Secondly, Lord Justice Coulson was at pains to point out that his rejection of the university’s ground of appeal on the construction of the war exclusion itself was driven in large part by matters agreed by the parties:
“But, as a result of a number of specific agreements between the parties, addressed below, I am driven to conclude that there is really no point of difference between them as to the proper interpretation of the War exclusion clause.”
“Secondly, it is agreed that the dropping of the bomb was an act of war. Thus it was agreed that the War exclusion clause would apply unless the appellant could show that the dropping of the bomb was not the proximate cause, or a concurrent proximate cause of approximately equal efficiency, of the loss and damage.”
“Potential issues which might have arisen, such as i) whether the “war being referred to could mean a war that had ended at the time that the buildings were built and the policy was incepted; or ii) whether the damage did not result from a war-like desire to damage and destroy, but from a controlled explosion which had been an attempt to eliminate or at least minimise any damage at all; did not arise between the parties, either at first instance or on appeal. On the basis of the agreements about the proper interpretation of the War exclusion clause, I therefore conclude that Ground 3 of the Appeal must fail.”
It is impossible to know whether such arguments would have succeeded (and certainly there is no indication in the judgment that they would have), but it is relatively unusual for the court to have volunteered in such detail issues which “might have arisen” but did not. As such, the Court of Appeal’s ruling appears to have left room for further argument should similar facts arise in the future.
With the Ministry of Defence confirming that it has been involved in making safe an average of 60 unexploded second world war bombs annually since 2010, the possibility of further claims seems far from a remote possibility. In that case, policyholders may find that the Court of Appeal’s conclusions in the University of Exeter case do not necessarily represent the end of the line.
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